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Valuation

Chanti Rosario
Chanti Rosario

This valuation report estimates the fair market value of ITFX Technologies, Inc. as of November 30, 2011. KPMG considered the income, market, and cost approaches, but relied primarily on the discounted cash flow method under the income approach and the guideline public company method under the market approach. Based on these analyses, KPMG estimates the fair market value of ITFX's equity to be between $87 million and $108 million.

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Valuation Approach Definition of Fair Market Value This report describes the valuation analysis performed by KPMG to estimate the FMV of a 100 percent equity interest in ITFX as of the Valuation Date. Fair market value is defined herein as the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. Valuation Approaches Considered In preparing our valuation, KPMG considered the three generally accepted valuation approaches: (i) the income approach, (ii) the market approach, and (iii) the cost approach. A brief description of the three approaches follows. Income Approach The income approach (Income Approach) recognizes that the value of an investment is premised on the receipt of future economic benefits. These benefits can include earnings, cost savings, tax deductions, and the proceeds from disposition. The discounted cash flow method (DCF Method) is a form of the Income Approach that is commonly used to value business interests. The DCF Method involves estimating the future cash flows of the business and discounting them to their present value. The discount rate selected is based on consideration of the risks inherent in the investment and market rates of return available from alternative investments of similar type and quality as of the Valuation Date.
More specifically, the DCF Method bases the value of a company on the cash flow attributable to that company. This approach is based on the assumptions that: (i) a company is worth what it can generate in future cash flows to its owners; (ii) the future cash flows are reasonably predictable; and (iii) the cost of capital and investors required rates of return on invested capital can be estimated. This approach assumes that the income derived from a company will, to a large extent, control the value of that company. Market Approach The market approach (Market Approach) measures the value of a company through an analysis of recent sales or offerings of comparable companies. The guideline public company method (Guideline Public Company Method) and the guideline transactions method (Guideline Transaction Method) are two forms of the Market Approach commonly used to value business interests. The Guideline Public Company Method involves comparing the subject company to similar companies whose stock is freely traded on an organized exchange. The Guideline Transaction Method compares the subject company to similar companies recently sold in arms length transactions. The application of these two methods generally entails the development of revenue or earnings multiples based on the market value of the guideline companies. These multiples are then used to develop an estimate of value for the subject company. When applying these methods, consideration is given to differences in the financial condition and operating performance of the subject company versus the guideline companies. Cost Approach The cost approach (Cost Approach) considers reproduction or replacement cost as an indicator of value. The Cost Approach is based on the assumption that a prudent investor would pay no more for an entity than the amount for which he could replace or re-create it. Historical costs are often used to estimate the current cost of replacing the entity valued. In doing so, adjustments for physical deterioration and obsolescence are taken into account. When using the Cost Approach to value a business enterprise, the equity value is estimated as the appraised value of the individual assets that comprise the business less the value of the liabilities that encumber those assets. Valuation Approaches Applied We relied on both the Income and Market Approaches to arrive at our estimate of the FMV of the equity. Under the Income Approach, we utilized a DCF Method to arrive at our estimate of FMV. Under the Market Approach, we applied the Guideline Public Company Method. We did not use the Guideline Transaction Method to calculate an estimated FMV. KPMG chose not to use the Guideline Transaction Method due to a lack of publicly available data for comparable transactions required to select the most appropriate transaction and corresponding multiples. While KPMG did not rely on the Guideline Transaction Method, we did observe valuation multiples that were generally consistent with the Guideline Public Company Method. KPMG also considered the Guideline Transaction Method when selecting a control premium. See Section 5.2.1 for further discussion. KPMG also did not utilize the Cost Approach because it would not be expected to render a reliable FMV for a cash flow generating going-concern such as ITFX.
Valuation Analysis Income Approach The DCF Method projects the net amount of cash flows a company will generate from operating and investing activities in the future. The DCF Method captures the value of a business by discounting its future expected free cash flows to their present value at a discount rate that reflects the time value of money and the riskiness of the cash flow stream. The key issues with respect to this method are the determination of the free cash flows, the discount rate, and the terminal value. Each of these issues is addressed separately below. DCF Method Free Cash Flows Free cash flow is the amount of a companys cash flow that can be distributed to investors without impairing the future operations of the business. In other words, it is a companys cash flow derived from conducting its day-to-day business activities less the amount of investment required to keep the company running as a going concern. For the purpose of this valuation, we are focused on free cash flow to equity holders. A definition of free cash flow to equity, as estimated for the purpose of this valuation analysis, is provided below. NET INCOME PLUS INVESTMENT IN ASSETS PLUS CHANGE IN LIABILITIES EQUALS FREE CASH FLOW TO EQUITY The Company provided KPMG with financial statement projections for FY 2011 through FY 2016. Beyond the projection period provided by Company management, KPMG trended revenue growth down to a growth rate of five percent in 2021 and applied the same net income margin used in the projection period provided by Company management going forward. We used these projections as the basis for the Subject Companys free cash flow projections. For the fiscal year 2011, KPMG adjusted the Companys Net Income in the financial projections provided by adding back a $140,000 related to a one time litigation settlement. Projected Assets and Liabilities In order to arrive at free cash flow to equity holders, KPMG analyzed the GLCs financial metrics in order to forecast the required investment in assets and change in liabilities required to support the Companys growth. KPMG first projected the required assets necessary to achieve the Companys revenue projections. For the first year of the projection period, FY 2011, KPMG forecasted the asset balance by taking the Companys asset balance as of September 30, 2011 as a percentage of the Companys LTM revenue as of September 30, 2011. KPMG applied that same percentage to the Companys FY 2011 revenue projection to arrive at the projected FY 2011 asset balance. For each subsequent fiscal year, KPMG set asset growth equal to revenue growth.
After projecting the required asset growth, KPMG determined the required equity by targeting a long term Equity/Assets ratio of 25.0 percent. The target Equity/Assets ratio was determined by reviewing GLCs Equity/Asset ratios.11 As of September 30, 2011, InvestTechFXs Equity/Assets ratio was approximately 61.0 percent, well above the median or average for the GLCs. Over the projection period, KPMG trended the Equity/Asset ratio down to 25.0 percent, which is consistent with levels exhibited by GLCs. KPMG multiplied the Equity/Assets ratio in each year by the respective asset balances in order to arrive at the required equity. After forecasting the required asset and equity balances in each year, the corresponding liability is equal to the difference between the two. Discount Rate We prepared the free cash flow projections for the valuation analysis based on free cash flow to equity holders and reflect the cash flows available for distribution to equity holders only. Accordingly, the discount rate applied to the free cash flows reflects the return required by equity holders. This discount rate represents ITFXs cost of equity (Re). Terminal Value For the purposes of valuation, the life of a business is essentially separated into two time periods, (1) during and (2) after the explicit projection period. The terminal value reflects the present value of all free cash flows occurring after the last year of the explicit projection period. The terminal value was calculated based on capitalization theory using the Gordon Growth model. The Gordon Growth model estimates the value of cash flow received, assuming stable annual growth in perpetuity. The residual value calculation estimates the value of the annual cash flow to be received after the discrete projection period. We adjusted the residual value for the equity retention (three percent of fiscal year 2021s equity balance) necessary to fund asset growth into perpetuity. Results The sum of (i) the present value of the free cash flows for the explicit projection period, fiscal year 2011 through fiscal year 2021, plus (ii) the present value of the terminal value represents the FMV value of InvestTechFX. The resulting FMV indicated by the DCF Method is approximately $100.0 million (rounded).17While our conclusion of value based on the DCF Method is approximately $100.0 million, we present a range of values in Schedule 1 based on discount rates 100 basis points above and below our calculated Ke of 17.0 percent and Terminal Growth Rates (TGR) 50 basis points above and below the 3.0 assumed in the analysis presented in Schedule 5. The resulting indicated range is between $91.0 million and $111.0 million Market Approach KPMG estimated the fair market value of InvestTechFXs equity by applying market multiples of comparable publicly-traded companies obtained through the Guideline Public Company Method.
Guideline Public Company Method We performed the Guideline Public Company Method to analyze valuation multiples of publicly- traded comparable companies. Although no two companies are entirely alike, the companies selected as guideline companies are engaged in the same or a similar line of business as the Company. Other relevant factors, such as size, growth and profitability are considered to make the most valid comparison. After a thorough search of several databases using strict criteria, the following public companies were selected as GLCs: FXCM, Inc. (FXCM); BGC Partners, Inc. (BGC); Gain Capital Holdings, Inc. (GCAP); GFI Group, Inc. (GFI); MarketAxess Holdings, Inc. (MKTX); and Interactive Brokers Group, Inc. (IBKR). See Schedule 7 for a description of each of the aforementioned GLCs. In addition to selecting reasonably similar publicly-traded companies, the application of the Guideline Public Company Method includes: - Analysis of the GLCs financial and operating performance, growth, size, leverage and risk relative to the Company; - Calculation of equity multiples for the selected GLCs; - Selection of appropriate market multiples to account for differences between the GLCs and - InvestTechFX; and - Application of the market multiples to the Companys financial metrics to arrive at an - indication of value. We applied valuation multiples to the Companys LTM 9/30/2011 normalized net income. In order to select an appropriate multiple, KPMG looked at InvestTechFXs size, growth, and profitability in relation to the GLCs. After assessing these factors, KPMG selected a Price/LTM Net Income range between 12.0x and 15.0x. After applying the multiples to the Companys normalized LTM net income, KPMG arrived at a range of FMV on a minority interest basis between approximately $76.0 million and $94.0 million. In order to arrive at an estimated FMV for the Company on a controlling interest basis, KPMG applied a control premium of 10.0 percent. The control premium is based on observed 30-day stock premiums of guideline transactions in addition to additional research performed by KPMG.19 After applying the control premium, the resulting indicated range of FMV on a controlling interest basis was between $83.0 million and $104.0 million. Guideline Transaction Method The Guideline Transaction Method is similar to the Guideline Public Company Method, except that instead of using the prices of publicly traded securities as the benchmark, we examined the prices paid in recent sales of similar businesses in the industry. KPMG searched the Capital IQ database to find recent transactions involving acquired companies similar to InvestTechFX. When conducting our transaction search, we identified 15 guideline transactions that were executed between January 1, 2008 and the Valuation Date. Of these 15 transactions, the majority did not disclose the financial terms of the deals, making it difficult for KPMG to conclude on an appropriate multiple. Accordingly, as previously mentioned, KPMG did not utilize the Guideline Transaction Method to estimate FMV. However, we did consider it in our analysis. Furthermore, we did rely on the observed 30-day stock premiums paid for the transactions that we identified.
Final Value Conclusion In order to estimate the range of FMV for InvestTechFX, weightings were applied to the value conclusions from the DCF Method and the Guideline Public Company Method. Since the DCF Method incorporates assumptions and expectations specific to the Company, this approach generally provides a reliable indication of value. A weighting of 50.0 percent was given to the Income Approach. The Market Approach provides relevant market pricing data that should be In arriving at our opinion, KPMG applied considered and, when applied correctly, should correlate with the results obtained from an Income Approach. As a result, KPMG also assigned a weighting of 50.0 percent to the Guideline Public Company Method. KPMG applied these weightings to the low and high end range of each methodology. As presented in the valuation conclusions summary (Schedule 1), the recommended range of FMV on a controlling interest basis of ITFX, as of the Valuation Date, is estimated to be Between: $87,000,000 - $108,000,000 In arriving at our opinion, KPMG applied generally accepted valuation procedures based upon economic and market factors. Summary of Exhibits Schedule 1 Summary of Valuation Approaches Schedule 2 Historical Balance Sheets Schedule 3 Historical & Projected Income Statements Schedule 4 Historical & Projected Ratio Analysis Schedule 5 Discounted Cash Flow Analysis
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RE: Estimation of the Fair Market Value of the Equity of ITFX Technologies, Inc. as of November 30, 2011 Pursuant to your request, KPMG LLP (KPMG) performed a valuation engagement in order to determine the fair market value (FMV) of a 100 percent equity interest in ITFX Technologies, Inc. (ITFX, the Company or the Client) as of November 30, 2011 (the Valuation Date). CONCLUSION OF VALUE Based on the valuation analysis described in the accompanying report and supporting schedules, the recommended FMV of ITFXs equity is reasonably estimated to be between $87.0 million and $108.0 million. This conclusion of value is based on the assumption that a potential third party acquirer retains the Companys current tax structure in which a zero percent effective corporate tax rate is achieved.1 KPMG has has prepared a sensitivity table in Schedule 5 which shows the potential impact that alternative tax rate assumptions could have on the aforementioned FMV range. Our analysis assumes that the Company had no undisclosed real or contingent assets or liabilities, no unusual obligations or substantial commitments, other than in the ordinary course of business, nor had any litigation pending or threatened that would have a material effect on our analysis. These assumptions are limitations to KPMGs analysis. Respectfully submitted,

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  • 1. Valuation Approach Definition of Fair Market Value This report describes the valuation analysis performed by KPMG to estimate the FMV of a 100 percent equity interest in ITFX as of the Valuation Date. Fair market value is defined herein as the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. Valuation Approaches Considered In preparing our valuation, KPMG considered the three generally accepted valuation approaches: (i) the income approach, (ii) the market approach, and (iii) the cost approach. A brief description of the three approaches follows. Income Approach The income approach (Income Approach) recognizes that the value of an investment is premised on the receipt of future economic benefits. These benefits can include earnings, cost savings, tax deductions, and the proceeds from disposition. The discounted cash flow method (DCF Method) is a form of the Income Approach that is commonly used to value business interests. The DCF Method involves estimating the future cash flows of the business and discounting them to their present value. The discount rate selected is based on consideration of the risks inherent in the investment and market rates of return available from alternative investments of similar type and quality as of the Valuation Date.
  • 2. More specifically, the DCF Method bases the value of a company on the cash flow attributable to that company. This approach is based on the assumptions that: (i) a company is worth what it can generate in future cash flows to its owners; (ii) the future cash flows are reasonably predictable; and (iii) the cost of capital and investors required rates of return on invested capital can be estimated. This approach assumes that the income derived from a company will, to a large extent, control the value of that company. Market Approach The market approach (Market Approach) measures the value of a company through an analysis of recent sales or offerings of comparable companies. The guideline public company method (Guideline Public Company Method) and the guideline transactions method (Guideline Transaction Method) are two forms of the Market Approach commonly used to value business interests. The Guideline Public Company Method involves comparing the subject company to similar companies whose stock is freely traded on an organized exchange. The Guideline Transaction Method compares the subject company to similar companies recently sold in arms length transactions. The application of these two methods generally entails the development of revenue or earnings multiples based on the market value of the guideline companies. These multiples are then used to develop an estimate of value for the subject company. When applying these methods, consideration is given to differences in the financial condition and operating performance of the subject company versus the guideline companies. Cost Approach The cost approach (Cost Approach) considers reproduction or replacement cost as an indicator of value. The Cost Approach is based on the assumption that a prudent investor would pay no more for an entity than the amount for which he could replace or re-create it. Historical costs are often used to estimate the current cost of replacing the entity valued. In doing so, adjustments for physical deterioration and obsolescence are taken into account. When using the Cost Approach to value a business enterprise, the equity value is estimated as the appraised value of the individual assets that comprise the business less the value of the liabilities that encumber those assets. Valuation Approaches Applied We relied on both the Income and Market Approaches to arrive at our estimate of the FMV of the equity. Under the Income Approach, we utilized a DCF Method to arrive at our estimate of FMV. Under the Market Approach, we applied the Guideline Public Company Method. We did not use the Guideline Transaction Method to calculate an estimated FMV. KPMG chose not to use the Guideline Transaction Method due to a lack of publicly available data for comparable transactions required to select the most appropriate transaction and corresponding multiples. While KPMG did not rely on the Guideline Transaction Method, we did observe valuation multiples that were generally consistent with the Guideline Public Company Method. KPMG also considered the Guideline Transaction Method when selecting a control premium. See Section 5.2.1 for further discussion. KPMG also did not utilize the Cost Approach because it would not be expected to render a reliable FMV for a cash flow generating going-concern such as ITFX.
  • 3. Valuation Analysis Income Approach The DCF Method projects the net amount of cash flows a company will generate from operating and investing activities in the future. The DCF Method captures the value of a business by discounting its future expected free cash flows to their present value at a discount rate that reflects the time value of money and the riskiness of the cash flow stream. The key issues with respect to this method are the determination of the free cash flows, the discount rate, and the terminal value. Each of these issues is addressed separately below. DCF Method Free Cash Flows Free cash flow is the amount of a companys cash flow that can be distributed to investors without impairing the future operations of the business. In other words, it is a companys cash flow derived from conducting its day-to-day business activities less the amount of investment required to keep the company running as a going concern. For the purpose of this valuation, we are focused on free cash flow to equity holders. A definition of free cash flow to equity, as estimated for the purpose of this valuation analysis, is provided below. NET INCOME PLUS INVESTMENT IN ASSETS PLUS CHANGE IN LIABILITIES EQUALS FREE CASH FLOW TO EQUITY The Company provided KPMG with financial statement projections for FY 2011 through FY 2016. Beyond the projection period provided by Company management, KPMG trended revenue growth down to a growth rate of five percent in 2021 and applied the same net income margin used in the projection period provided by Company management going forward. We used these projections as the basis for the Subject Companys free cash flow projections. For the fiscal year 2011, KPMG adjusted the Companys Net Income in the financial projections provided by adding back a $140,000 related to a one time litigation settlement. Projected Assets and Liabilities In order to arrive at free cash flow to equity holders, KPMG analyzed the GLCs financial metrics in order to forecast the required investment in assets and change in liabilities required to support the Companys growth. KPMG first projected the required assets necessary to achieve the Companys revenue projections. For the first year of the projection period, FY 2011, KPMG forecasted the asset balance by taking the Companys asset balance as of September 30, 2011 as a percentage of the Companys LTM revenue as of September 30, 2011. KPMG applied that same percentage to the Companys FY 2011 revenue projection to arrive at the projected FY 2011 asset balance. For each subsequent fiscal year, KPMG set asset growth equal to revenue growth.
  • 4. After projecting the required asset growth, KPMG determined the required equity by targeting a long term Equity/Assets ratio of 25.0 percent. The target Equity/Assets ratio was determined by reviewing GLCs Equity/Asset ratios.11 As of September 30, 2011, InvestTechFXs Equity/Assets ratio was approximately 61.0 percent, well above the median or average for the GLCs. Over the projection period, KPMG trended the Equity/Asset ratio down to 25.0 percent, which is consistent with levels exhibited by GLCs. KPMG multiplied the Equity/Assets ratio in each year by the respective asset balances in order to arrive at the required equity. After forecasting the required asset and equity balances in each year, the corresponding liability is equal to the difference between the two. Discount Rate We prepared the free cash flow projections for the valuation analysis based on free cash flow to equity holders and reflect the cash flows available for distribution to equity holders only. Accordingly, the discount rate applied to the free cash flows reflects the return required by equity holders. This discount rate represents ITFXs cost of equity (Re). Terminal Value For the purposes of valuation, the life of a business is essentially separated into two time periods, (1) during and (2) after the explicit projection period. The terminal value reflects the present value of all free cash flows occurring after the last year of the explicit projection period. The terminal value was calculated based on capitalization theory using the Gordon Growth model. The Gordon Growth model estimates the value of cash flow received, assuming stable annual growth in perpetuity. The residual value calculation estimates the value of the annual cash flow to be received after the discrete projection period. We adjusted the residual value for the equity retention (three percent of fiscal year 2021s equity balance) necessary to fund asset growth into perpetuity. Results The sum of (i) the present value of the free cash flows for the explicit projection period, fiscal year 2011 through fiscal year 2021, plus (ii) the present value of the terminal value represents the FMV value of InvestTechFX. The resulting FMV indicated by the DCF Method is approximately $100.0 million (rounded).17While our conclusion of value based on the DCF Method is approximately $100.0 million, we present a range of values in Schedule 1 based on discount rates 100 basis points above and below our calculated Ke of 17.0 percent and Terminal Growth Rates (TGR) 50 basis points above and below the 3.0 assumed in the analysis presented in Schedule 5. The resulting indicated range is between $91.0 million and $111.0 million Market Approach KPMG estimated the fair market value of InvestTechFXs equity by applying market multiples of comparable publicly-traded companies obtained through the Guideline Public Company Method.
  • 5. Guideline Public Company Method We performed the Guideline Public Company Method to analyze valuation multiples of publicly- traded comparable companies. Although no two companies are entirely alike, the companies selected as guideline companies are engaged in the same or a similar line of business as the Company. Other relevant factors, such as size, growth and profitability are considered to make the most valid comparison. After a thorough search of several databases using strict criteria, the following public companies were selected as GLCs: FXCM, Inc. (FXCM); BGC Partners, Inc. (BGC); Gain Capital Holdings, Inc. (GCAP); GFI Group, Inc. (GFI); MarketAxess Holdings, Inc. (MKTX); and Interactive Brokers Group, Inc. (IBKR). See Schedule 7 for a description of each of the aforementioned GLCs. In addition to selecting reasonably similar publicly-traded companies, the application of the Guideline Public Company Method includes: - Analysis of the GLCs financial and operating performance, growth, size, leverage and risk relative to the Company; - Calculation of equity multiples for the selected GLCs; - Selection of appropriate market multiples to account for differences between the GLCs and - InvestTechFX; and - Application of the market multiples to the Companys financial metrics to arrive at an - indication of value. We applied valuation multiples to the Companys LTM 9/30/2011 normalized net income. In order to select an appropriate multiple, KPMG looked at InvestTechFXs size, growth, and profitability in relation to the GLCs. After assessing these factors, KPMG selected a Price/LTM Net Income range between 12.0x and 15.0x. After applying the multiples to the Companys normalized LTM net income, KPMG arrived at a range of FMV on a minority interest basis between approximately $76.0 million and $94.0 million. In order to arrive at an estimated FMV for the Company on a controlling interest basis, KPMG applied a control premium of 10.0 percent. The control premium is based on observed 30-day stock premiums of guideline transactions in addition to additional research performed by KPMG.19 After applying the control premium, the resulting indicated range of FMV on a controlling interest basis was between $83.0 million and $104.0 million. Guideline Transaction Method The Guideline Transaction Method is similar to the Guideline Public Company Method, except that instead of using the prices of publicly traded securities as the benchmark, we examined the prices paid in recent sales of similar businesses in the industry. KPMG searched the Capital IQ database to find recent transactions involving acquired companies similar to InvestTechFX. When conducting our transaction search, we identified 15 guideline transactions that were executed between January 1, 2008 and the Valuation Date. Of these 15 transactions, the majority did not disclose the financial terms of the deals, making it difficult for KPMG to conclude on an appropriate multiple. Accordingly, as previously mentioned, KPMG did not utilize the Guideline Transaction Method to estimate FMV. However, we did consider it in our analysis. Furthermore, we did rely on the observed 30-day stock premiums paid for the transactions that we identified.
  • 6. Final Value Conclusion In order to estimate the range of FMV for InvestTechFX, weightings were applied to the value conclusions from the DCF Method and the Guideline Public Company Method. Since the DCF Method incorporates assumptions and expectations specific to the Company, this approach generally provides a reliable indication of value. A weighting of 50.0 percent was given to the Income Approach. The Market Approach provides relevant market pricing data that should be In arriving at our opinion, KPMG applied considered and, when applied correctly, should correlate with the results obtained from an Income Approach. As a result, KPMG also assigned a weighting of 50.0 percent to the Guideline Public Company Method. KPMG applied these weightings to the low and high end range of each methodology. As presented in the valuation conclusions summary (Schedule 1), the recommended range of FMV on a controlling interest basis of ITFX, as of the Valuation Date, is estimated to be Between: $87,000,000 - $108,000,000 In arriving at our opinion, KPMG applied generally accepted valuation procedures based upon economic and market factors. Summary of Exhibits Schedule 1 Summary of Valuation Approaches Schedule 2 Historical Balance Sheets Schedule 3 Historical & Projected Income Statements Schedule 4 Historical & Projected Ratio Analysis Schedule 5 Discounted Cash Flow Analysis
  • 11. RE: Estimation of the Fair Market Value of the Equity of ITFX Technologies, Inc. as of November 30, 2011 Pursuant to your request, KPMG LLP (KPMG) performed a valuation engagement in order to determine the fair market value (FMV) of a 100 percent equity interest in ITFX Technologies, Inc. (ITFX, the Company or the Client) as of November 30, 2011 (the Valuation Date). CONCLUSION OF VALUE Based on the valuation analysis described in the accompanying report and supporting schedules, the recommended FMV of ITFXs equity is reasonably estimated to be between $87.0 million and $108.0 million. This conclusion of value is based on the assumption that a potential third party acquirer retains the Companys current tax structure in which a zero percent effective corporate tax rate is achieved.1 KPMG has has prepared a sensitivity table in Schedule 5 which shows the potential impact that alternative tax rate assumptions could have on the aforementioned FMV range. Our analysis assumes that the Company had no undisclosed real or contingent assets or liabilities, no unusual obligations or substantial commitments, other than in the ordinary course of business, nor had any litigation pending or threatened that would have a material effect on our analysis. These assumptions are limitations to KPMGs analysis. Respectfully submitted,